Unlocking the digital potential of rural areas – research

Rural England CIC and Scotland’s Rural College (SRUC) have published a joint research report, supported by Amazon, which explores the economic potential from rural based businesses across the UK taking-up digital opportunities that arise from broadband, mobile and other networks.

This project took an independent look at businesses’ use of digital connectivity, including how they use it, what benefits arise, what barriers they face and what future potential there is if barriers can be overcome.

This is a topic of importance for the future success of the rural economy and its varied businesses. The e-economy is driving business efficiency, productivity and competitiveness, and is changing the way many go about their business.

The Report

The Unlocking the digital potential of rural areas report was launched on the 12th March 2018

Research Infographic and Press Release

£12 billion productivity gain from greater digital adoption

Unlocking the digital potential of rural areas across the UK could add between £12 billion and £26 billion (Gross Value Added) annually to the UK economy, according to estimates produced by this research.

This would result from the additional turnover achieved by rural based businesses, which would be between £15 billion and £34 billion annually.

The research shows that most of that productivity growth (more than £9 billion of the £12 billion) would come from micro-businesses which have between zero and nine employees. Many of the smallest are family run or home based.

Indeed, the main potential from increased digital adoption in rural areas would come from assisting the bulk of ordinary small and micro businesses to raise their digital game. Whilst technology-driven businesses should not be overlooked, it is growing digital adoption across sectors such as agriculture, retail, tourism, construction, leisure and business services which will pay the highest productivity dividend.

The digital appetite of rural businesses is illustrated by the fact that four in five of them believe digital tools and services will be important to their future growth. Cloud computing is seen as important by 67%, 5G mobile by 54%, the Internet of Things by 47% and Machine Learning/Artificial Intelligence by 26%.

It is equally notable that over 80% of rural businesses which exported in the last year made use of online sales. The top export destinations were the EU (84% of exporters) and the USA (45%).

Digital constraints

Setting aside issues with online connection speeds and reliability, more than half (52%) of rural businesses face some other type of constraint that holds back their digital take-up and hence their performance. For the smallest businesses the key constraint is finding external or outsourced digital or IT support. For larger businesses a more important issue is recruiting people with appropriate digital skills.

The benefits from the public sector’s sizeable investment in superfast broadband and mobile networks will only be properly realised if these other constraints are addressed in parallel.

Policy recommendations

The report acknowledges that various digital policy initiatives and programmes exist already which are relevant to rural areas. Rather than creating new and similar rural structures, the report calls for existing national initiatives and programmes to take better account of rural business needs – a process often referred to as ‘rural proofing’. This would overcome their tendency to be urban-focussed or to overlook rural opportunities.

Other policy recommendations include:

* Simpler signposting to digital support services – creating local directories and linking various types of digital support through single portals;

* Better access to support – encouraging the establishment of more enterprise hubs in rural towns or locations, offering connectivity, hot-desk space, start-up workspace and training;

* Smarter digital training and skills development – better collaboration between local businesses and training or education providers;

* Faster business adoption of connectivity – reinforce efforts to promote the business benefits and use business peers to champion these with real-life examples;

* Stronger rural targeting by policies and strategies – making digital growth a key objective of post-Brexit rural business support programmes. Ensure the Industrial and Digital Strategies are rural proofed for their implementation.

It is important that both public and private sectors work collaboratively to drive this agenda forward.

Doug Gurr, UK Country Manager at Amazon, said: “Over the past 20 years, we’ve seen opportunities for rural entrepreneurs transformed through e-commerce, better delivery services and growing access to fast broadband. But as today’s report shows, there’s much further to go before anyone can say the rural-urban divide has closed. Embracing digital technology not only benefits the economy; it also allows rural communities to combine great quality of life with access to global opportunities. We are working to play our part in helping achieve the report’s ambitions through programmes such as Amazon Academy events and webinars, where last year we helped hundreds of rural businesses learn how to go digital.”

Brian Wilson, Chair of Directors at Rural England said: “Rural businesses are to a considerable degree already strong digital adopters and most recognise the importance of going further in future. However, their ability to go digital has been held back by a number of constraints. To help address constraints and boost rural economic productivity, we believe there are some straight forward ‘quick wins’, which if delivered locally, nationally and UK-wide, could have a significant and positive impact on the quality of life for rural communities and the UK economy as a whole.”

The research methodology comprised:

* Analysis of economic and business data sets, to calculate statistics for predominantly rural areas across the UK;

* Review of the existing literature to identify relevant known facts and figures;

* Interviews with some rural specialists and digital specialists, to tap into their expertise and experience;

* A UK-wide survey of rural based businesses (807 responses) to ask about current use of digital, the benefits derived and the constraints faced;

* Use of the survey data and rural analysis to estimate the business turnover and productivity gains from addressing constraints to digital take-up.